Amazon’s Kindle Disclosure Policies Could Attract FTC Attention

Any way you look at it, the Kindle is a remarkable reading system. Amazon has managed to capture massive mainstream attention for an electronic reading device that combines seamless wireless content distribution with a purchasing process that is so transparent you’d be forgiven for not realizing you’ve actually paid money for a book.

Equally remarkable is the fact that Amazon sells DRM-restricted ebooks side-by-side with DRM-free ebooks while making no distinction between the two formats. From the consumer’s perspective there’s no way to tell which Kindle books are locked down by DRM before purchase.

Over the past week, Teleread has been orchestrating a consumer driven tagging effort to tag DRM-free books in the Kindle store. While I think the project is a brilliant use of crowdsourcing, it also reveals just how bad the problem really is. In order to accurately tag a Kindle ebook as DRM-free, Amazon customers must first buy the book, then go through a somewhat involved process to test whether or not the book is locked down.

It’s admirable that there are consumers who are actually willing to do this, but it seems unfair and unreasonable that consumers should have to spend their own money in order to notify other consumers of product limitations. Amazon has a responsibility to fully disclose the DRM status of each Kindle book. The company could easily do so in a standardized way on Kindle product pages.

I contacted Amazon about this issue earlier this week and received the following response:

Thanks for sending us your question about Digital Rights Management for Amazon Kindle content. Publishers choose whether or not they apply DRM to their content, and when they do, we respect and protect that DRM.

At this time we do not post information as to which books have DRM, and which do not. I’ll pass your request along to the Kindle team as a suggestion though.

While it’s true that publishers make the choice on whether DRM is used on their Kindle ebooks, Amazon is the ultimate beneficiary of this choice. It’s Amazon’s store, Amazon’s proprietary ebook format, and Amazon’s reading device. Amazon has the ultimate responsibility to tell its customers what they’re paying for *before* they actually make the purchase.

Kindle’s Terms of Service As a Form of DRM

As it turns out, DRM disclosure on Kindle ebooks may not matter all that much. A closer reading of the Kindle Terms of Service reveals that Kindle owners are only permitted to read Kindle ebooks on authorized devices:

Use of Digital Content. Upon your payment of the applicable fees set by Amazon, Amazon grants you the non-exclusive right to keep a permanent copy of the applicable Digital Content and to view, use, and display such Digital Content an unlimited number of times, solely on the Device or as authorized by Amazon as part of the Service and solely for your personal, non-commercial use. Digital Content will be deemed licensed to you by Amazon under this Agreement unless otherwise expressly provided by Amazon. [Emphasis added]

With a limitation like that it really doesn’t matter whether Kindle ebooks have DRM or not. The Terms of Service act as a form of DRM in that it effectively prohibits Kindle owners form using Kindle content on any competing device.

Nearly all of the Kindle owners I’ve talked to mistakenly believe that they actually own the Kindle ebooks they purchase. Furthermore, the more tech savvy Kindle owners wrongly assume that they have the right to convert DRM-free Kindle books for use on competing reading devices — hence the movement to tag DRM-free books.

If Amazon was interested in providing its customers with full disclosure the Kindle terms of service would also include language like this:

Kindle books are intended to be read only on Kindle devices or with a Kindle mobile reading application. Your Kindle ebooks will be accessible for as long as you own a Kindle and have an active Amazon account. Access to your Kindle ebooks may be discontinued should your Amazon account be terminated. Kindle ebooks may not be read on any competing digital reading device.

It’s hard not to think that Amazon’s failure to disclose DRM limitations on ebooks, combined with the limitations in the Kindle terms of service, represent exactly the type of situation the FTC’s Mary Engle had in mind last month when she told the audience at the DRM Town Hall, “if your advertising giveth and your EULA taketh away, don’t be surprised if the FTC comes calling.”

There is nothing in Amazon’s advertising that would suggest the limitations spelled out in the Kindle’s terms of service. Likewise, Amazon provides consumers with no clue that their Kindle ebook purchases have DRM restrictions, or that those same ebooks may not be read on competing devices.

If you do own a Kindle you may wish to take this matter up with the FTC. Amazon’s inadequate DRM disclosure and limiting terms of service will almost certainly be of interest to the agency. You can file a complaint with the FTC online.

If you don’t yet own a Kindle but are considering a purchase, you will definitely want to take these considerations into account as part of your buying decision.

7 Responses to “Amazon’s Kindle Disclosure Policies Could Attract FTC Attention”

  1. It’s worth noting that one of the options from your Amazon account page is to download the content to your computer, which suggests that’s “authorized by Amazon as part of the Service.”

    I’m no lawyer, but that appears to offer a fair amount of flexibility — for example, most ebook reading devices and systems would qualify as “my computer.”

  2. Kirk says:

    Interesting point Andrew. But, even then you would only be able to read the DRM-free Kindle ebooks on your computer. There’s still no Kindle desktop application.

    As I think this through a bit more I realize that DRM disclosure is still important, regardless of how the Kindle TOS is interpreted. As you’ve noted, the Kindle titles can transferred to a computer and read there — but only if they’re DRM-free.

  3. Mike Cane says:

    At some point the issue of eBooks will be before a Congressional Committee. And I’m not joking, either. How can schools, libraries, even local, state, and Federal governments move to eBooks with all the conflicting DRM and file formats? This is a budgetary nightmare waiting to happen. And a consumer uprising that will boil.

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